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Cryptocurrency exchange Coinbase will initiate the repurchase of up to $150 million of its 2031 senior notes at a price of 64.5 cents on the dollar, representing a 35.5% discount.
As per the announcement made on Aug. 7, the tender offer will be open until Sept. 1, featuring an early premium of three cents on the dollar in addition to the standard purchase price. The 2031 senior notes carry a coupon rate of 3.625% annually and have a total principal amount of $1 billion.
In the previous month, the exchange redeemed $65 million in convertible notes at a 29% discount. Following the start of the cryptocurrency bear market, Coinbase’s debt securities have been trading below par value due to investor apprehensions regarding its repayment capabilities.
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In its May 2022 submission to the United States Securities and Exchange Commission, Coinbase noted that users’ digital assets stored on the platform might “be subject to bankruptcy proceedings” and could be classified as “unsecured creditors.” These risk factors are outlined in SEC filings for publicly traded companies. As evidenced in other cases, such as FTX and Celsius, unsecured creditors generally recover only a small portion of their initial assets as companies’ funds are primarily liquidated to satisfy senior creditors.
Not your keys, not your crypto. This is from coinbase. pic.twitter.com/CaIzQBYQ38
— Richard Heart (@RichardHeartWin) May 11, 2022
The exchange is also contending with an ongoing SEC lawsuit that alleges it is functioning as an unregistered securities exchange. The company has since sought to have the lawsuit dismissed.
In its Q2 2023 report, Coinbase revealed that it maintained $3.3 billion in long-term debt compared to $5.2 billion in cash and equivalents. It reported an operating cash flow of $614 million during the first half of 2023. In comparison to Q2 2022, customer crypto deposits on the platform increased by 40% to reach $124.2 billion.
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